University of Washington EMBA Program
Regional 20
Marketing Management
“Setting Objectives &
Marketing Strategy: Segmentation, Targeting
and Positioning (STP)”
Instructor: Elizabeth Stearns
Thrive
Survival
Profits
Competitors
Competitors
Customers
Course Structure
The Marketing Framework/Concept
Analysis
5C’s Opportunity Analysis
Marketing Strategy & Customer Strategy
Goal Setting, Segmentation, Targeting, and Positioning
Implementation/Action Plans
Marketing Mix (4 P’s)
Marketing
Research
Hierarchy of Strategy
Corporate
Strategic Business Unit (SBU)
Product-Market
The Strategy Development and Implementation Process
Contention
Differing
Perspectives
Marketing
Project Planning
Consensus
Strategy
Formulation
Finance
Human Resources
R&D
Operations
Creativity
Sales
Program
Formulation
Coordination
Execution
Marketing Strategy & Objectives
•
Marketing Strategy: A game plan for achieving objectives
Typically a set of customer and competitor targets plus
a positioning, a framing of the organization’s offer in
the minds of customers
•
Objectives: Means of evaluating performance
•
Caveat: Consider that the position of your product in
the Product Life Cycle may influence your strategy
Setting Objectives
• Purpose
To identify the results we wish to achieve in
the market segments and provide a platform
for measurement and evaluation.
• Types of Marketing Objectives
– Strategic: Qualitative and directional
– Operational: Quantitative and time
dependent (SMART)
Select Dimensions for Operational
Marketing Objectives
Awareness
Attitude
Pre-Sale
Consideration
Purchase Intention
Dollars
(Nominal, Real)
Bottom Line
Profit
Contribution
Units
Financial Oriented
Volume Oriented
Growth
Market
Share
Trial,
Repeat
Sale
Return on
Investment
Post-Sale
Customer
Satisfaction
Gross
Spreads
Cash
Generated
Strategic Focus and Customer Targeting
ROI
Improve
Efficiency
Improve
Price
Change
Sales Mix
Reduce
Investment
Reduce
Costs
Strategic Focus and Customer Targeting
ROI
Increase Sales
Volume (units)
from customers
Retain existing
customers
More business from
current customers
Competitors'
customers
Non Users
Improve
Efficiency
Improve
Price
Change
Sales Mix
Reduce
Investment
Reduce
Costs
A Note on Sources of Volume
Many objectives are “growth” oriented.
• Where does growth come from?
– Primary demand = “New” volume
• New users into the market
• Getting current users to use more
• Get same users to use for a “new” purpose
– Secondary demand = “Somebody else’s” volume
• Take volume from competitors
• Caveats
– Beware of cannibalization—it’s not really growth
– Stimulating secondary demand implies a competitive
response
Using Objectives in Alternatives &
Recommendations Choice
• Write an operational marketing objective
• Project all viable alternatives onto the dimension
of the objective  use expected value of outcome
• Measure the “attractiveness” of each alternative
according to whether/the degree to which it
satisfies your operational marketing objective
– If only 1 alternative meets your objective—choose it
– If 2 or more alternatives meet your objective…
• Choose the one which performs best on the dimension
underlying your objective
• Move to “tiebreaker” criteria
–
–
–
–
Risk/variance in performance
Cost
“Fit”
Etc.
Objectives Statements
• Our primary objective in the loudspeaker market is to grow
market share from 25% to 30% by stealing share from
competitors in 2003 while maintaining margins at 23%.
(What is wrong with this?)
• Our task is to generate $70 million cash flow from
mainframes in both 2003 and 2004, while maintaining
dollar-denominated market share at 45%.
– Primary objectives are most important
– Secondary objectives are relevant and desirable, but
tradeoffs for primary objectives are acceptable
Overview of STP Process
1.
Identify Segmentation/segmentation
bases and segment the market.
2.
Develop profiles of the resulting
Segments.
1.
Evaluate the attractiveness of each
Segment.
2.
Select target Segment(s).
1.
Identify possible positioning concepts for
each Segment.
2.
Select, develop, and communicate the
chosen positioning.
Segmentation
Targeting
Positioning
Steps in Market Segmentation,
Targeting,and Positioning
Market
Segmentation
1. Identify
segmentation
variables and
segment the
market
2. Develop
profiles of
resulting
segments
©2000 Prentice Hall
Market
Targeting
3. Evaluate
attractiveness
of each
segment
4. Select the
target
segment(s)
Market
Positioning
5. Identify
possible
positioning
concepts for
each target
segment
6. Select,
develop, and
communicate
the chosen
positioning
concept
Market Segmentation
• The process of grouping actual and potential
customers in a market for the purpose of selecting
targets for effort and designing marketing strategies
and programs for them
Market Segment
• A group of actual or potential customers with similar
characteristics, who seek similar sets of benefits and
attach the same importance to their satisfaction
Taxonomy at the Pump:
Five Types of Gasoline Buyers
Road Warriors:
Generally
higher-Income,
middle -aged men
who drive 25,000 to
50,000 miles a year .
. . buy premium with
a credit card . . .
purchase
sandwiches and
drinks from the
convenience store . .
. will sometimes
wash their cars at
the carwash.
18% of buyers
True Blues:
Usually men and
women with
moderate to high
incomes who are
loyal to a brand and
sometimes to a
particular station . . .
frequently buy
premium gasoline
and pay cash.
16% of buyers
Generation F3
(for fuel, food and
fast): Upwardly
mobile men and
women-half under
25 years of age-who
are constantly on the
go . . . drive a lot
and snack heavily
from the
convenience store.
27% of buyers
Homebodies:
Usually housewives
who shuttle their
children around
during the day and
use whatever
gasoline station is
based in town or
along their route of
travel.
21% of buyers
Price Shoppers:
Generally aren't
loyal to either a
brand or a particular
station, and rarely
buy the premium line
. . . frequently on
tight budgets . . .
efforts to woo them
have been the basis
of marketing
strategies for years.
20% of buyers
® Mobil Oil Company
Process: Example
Usage-based Segmentation for an
Established Product/Service
IDENTIFYING SEGMENTS
BASES
LEVELS
STRATEGIC IMPACT
Use of
product/service?
• Nonuser
• User
Category versus
Brand Build
Brand used?
• My Brand
•
Competitor’s
brand
Loyalty versus
Switching
Level of use?
• Heavy
• Moderate
• Light
Occasion of use?
• Time of day
• Season
Motivation for
use?
• Self /Other
• Functional/.
Psychic
Value of a customer,
Efficiency
DESCRIBING SEGMENTS
DEMOGRAPHICS/
MEDIA
VALUE
PSYCHOGRAPHICS TECHNOS
$$
Describe levels in terms of $$$,
Demographics Psychographics,
Media Habits, Lifestage,
Technos, etc.
Image Focus versus
Attribute Focus,
Timing
Form of the value
equation
Process
Purpose of Forming Market Segments
• To form the closest possible match between
customers’ needs or wants and priorities, and the
firm’s offer, such that customer satisfaction is
maximized and competitive advantage is created.
As a result, unit volume and/or price increases,
and profits are enhanced
Segmentation
• Dividing up the market into groups of consumers
who share similar needs (and who respond
similarly to marketing mix variables)
– Account for customers’ diverse needs and differing
behaviors in its strategy
– Design the marketing mix to more closely match
customer needs
– Improve efficiency and effectiveness of resource
allocation
Effective Segmentation
Measurable
• Size, purchasing power,
profiles of segments can
be measured.
Substantial
• Segments must be large or
profitable enough to serve.
Accessible
©2000 Prentice Hall
• Segments can be
effectively reached and
served.
Differential
• Segments must respond
differently to different
marketing mix elements &
actions.
Actionable
• Must be able to attract and
serve the segments.
Targeting
• Key Questions(Review)
– Selectivity: Which segments will we address?
– Concession: Which segments will we leave to
others?
– Concentration: What is the relative degree of effort
we will place on each segment we choose to
pursue?
• Select segments to pursue according to your
possession of Differential/Customer Advantage
Reis and Trout
Positioning: The battle for your
customer’s mind
USA: BEER CATEGORY MAP
Miller Lite
Amstel Light
Light
Coors Lite
Bass
Samuel Adams
Corona
Pete’s
Wicked Ale
Rolling Rock
Becks
Molson Ice
Michelob
Specialty
Budweiser
Guinness
Red Dog
Foster’s
Source: Simmons
SMM 1998
Busch
Traditional
Positioning Maps/Perceptual Space
USA: BEER CATEGORY MAP
Miller Lite
Amstel Light
Most of the time I am trying to lose weight.
I am driving.
Light
I exercise regularly.
Coors Lite
It’s important to attend religious services.
Bass
I really enjoy shopping for clothes.
I enjoy watching religious TV programs.
Samuel Adams
I am willing to volunteer for Environmental Organizations.
Corona
I am a Conservative Evangelical Christian.
I enjoy eating foreign foods.
Money is the best measure of success.
Pete’s
Wicked Ale
Rolling Rock
Becks
I like to do things
unconventional.
Specialty
Molson Ice
Michelob
Women are more
suited
to running homes.
Budweiser
Guinness
There is little I can do to change my life.
I like to be outrageous.
Red Dog
Foster’s
I’m no good at saving money.
Source: Simmons
SMM 1998
I’m not too concerned
about my appearance.
I feel very alone
in the world.
Busch
Traditional
Simmons Data
Positioning and Perceptual Maps
• What brands are perceived as similar to others?
– Deals with issue of substitutability.
– if customer’s brand is not available, what brand is
most likely to be purchased?
– Unique Position
» Or
– Easy switching
Positioning and Perceptual Maps
• What holes exist for repositioning an old, or
new product introduction? (Point on map where
no competitive brands exist)
– Opportunity or not?
• Ideal points = Preference maps
– If customer could have any product they
wished.
Positioning
…is the act of designing the
company’s offering and image to
occupy a distinctive place in the
the target market’s mind.
©2000 Prentice Hall
Positioning
• Positioning: The act of framing the
organization’s image and its offer in the
target customer’s minds, so it occupies a
distinct and valued place relative to
competition.
• The process we use to set ourselves apart
from competitors in the minds of the
customer.
Four D’s of Effective Positioning
Successful positioning requires:
• Defining what the brand is.
• Differentiating the brand from other similar
offers.
• Deepening the brand’s connection to
consumer’s goals.
• Defending the position as competitors react.
Example: Competitor Targets
7UP
• Direct Competitors in the same product form
• The Generalized Set of Competitors in the
same product form
• Competitors in a different product form that
satisfies the same basic need.
Think of your positioning statement as
leading to a piece of advertising
(define, differentiate, deepen, defend)
• Does it help overcome the pitfalls of positioning:
- Underpositioning Customers cannot sense the difference.
- Overpositioning Our offer projects too narrow an image.
- Confusing Positioning
We make too many claims, or keep changing the claims
over time.
- Doubtful Positioning
Consumers find our claims hard to believe.
• Will it find a way into our customer’s mind and will it stay
there?
• Is it about your customer or is it about the product? (selling
or marketing?)
Developing Positioning Statements
• Customer Target: Person(s) in whose mind(s) we
want to create the perception or image and whose
behavior we hope to affect
• Frame of Reference: Competitive offer(s) from
whom we wish to differentiate ourselves in order
to provide a reference point for the customer
• Compelling Point of Difference: How our offer
fits into the customer’s frame of reference better
than competing alternatives—and reasons to
believe that difference.
Developing Positioning Statements
Selecting Frames of Reference
• Competitive
– Direct competitors in the same product form
– Generalized set of competitors in the same product
form
– Competitors in a different product form that satisfy
the same basic benefit requirements
• Benefit-based
– Reference is customers’ goals and values
Developing Positioning Statements
Point of Difference
• Core Strategy: The benefits we intend to
emphasize in our communications to our core
customer targets (how we get customers to buy
from us rather than competitors)
– Exploit Differential Advantage
– Communicate key benefit in a clear, concise
statement
Developing Positioning Statements
Customer Target: Person(s) in whose mind(s) we want to create
the perception or image and whose behavior we hope to affect
Frame of Reference: Competitive offer(s) or counterfactuals from
whom we wish to differentiate ourselves in order to provide a
reference point for the customer
Compelling Point of Difference: How our offer fits into the
customer’s frame of reference better than competing
alternatives—and reasons to believe that difference.
To _____ (customer target description)
…my organization is the _____ (frame of reference)
…that ____ (point of difference)
because ____ (reason to believe dif.)
better than ____. (competitive target)
Positioning: Asics Gel MC Plus
Positioning Statement: To Michele, the recreational
marathoner who risks injury when she trains on
uneven surfaces, Asics MotionControl Plus puts
you back in control because it prevents
overpronation better than any other training shoe.
• Tag-line: You can’t control the road, but you can
control the way your foot reacts to it with Asics
Gel MC Plus.
Positioning: Asics Gel Kayano
• Positioning Statement: To Marc, the
recreational runner who places a premium on
enjoying the running experience, the Asics Gel
Kayano provides better cushioning than any
other shoe on every stride he takes through the
Impact Guidance System.
• Tag-line: Heel-to-toe comfort for a smooth ride.
Positioning: Reebok Boston Road
• Positioning Statement: To Marc, the
recreational runner who places a premium on
enjoying the running experience, the Brooks
Boston Road provides better cushioning than
any other shoe on every stride he takes through
DMX technology.
• Tag-line: Enjoy the sunrise in complete
comfort.
Whom does Marc believe?
Positioning: New Balance
• Positioning Statement: For Suzanne, the
working professional, New Balance shoes
let you leave behind the daily office grind
and discover the natural, simple beauty in
life.
• Tag-line: Your computer has a key labeled
“escape.” Does your life have one too?
Positioning: Common Errors
• Underpositioning
Customers cannot sense the difference.
• Overpositioning
Our offer projects too narrow an image.
• Confusing Positioning
We make too many claims, or keep changing the
claims over time.
• Doubtful Positioning
Consumers find our claims hard to believe.
Thank you!
Now, how about a little Pizza!
Contadina!